Anda di halaman 1dari 14



Topic 1:




• The under the topic we will :
– Examine the nature and scope of
public sector in Ghana;
– Compare Public sector and the
private sector
– Examine the Composition of PSEs;
– Outline the justification of
existence of PSE;
– Examine the NPM in Ghanaian
Public sector and

1/29/2015 copyright @Redeemer Krah 2


Nature and scope of

Public sector
• Public sector refers to that part of the
economy which is significantly
dominated by the activities of
government and its entities.
• Nowadays, the term Public Service is
mostly used in place of public sector.
• There is no equity interest in these
• PS does not exist for profit but rather to
provide public services.
• PS is broad in scope and nature. While
some operate purely on free charges
basis, others operate on commercial
lines such as GBEs/SOEs

1/29/2015 copyright @Redeemer Krah 3

Characteristics of PSEs
• PSE demonstrate the following
characteristics that separate them from
commercial entities:
– They are established by a specific Act of
Parliament , Legislative Instrument or
– They are not profit making
– They are financed by government
through taxes and other levies
– They are accountable to parliament
– They are usually engaged in the provision
of public goods and services.
• Public goods and services are non-excludable
and non-divisible.
– Marginal pricing or subvented pricing is
used to price their outputs.
– Organisations take the form of
Ministries, Departments and Agencies,
Boards, commissions, Authorities etc

1/29/2015 copyright @Redeemer Krah 4


of PSE
• PSEs may the classified based on the
mode of financing or based on the
powers and operations.
• Regarding financing, PSEs may be
classified as:
– Ordinary entities, which are funded
wholly by national budget
(appropriation) e.g. MDAs
– Subvented entities, which are funded
partly from government subvention
(budget) and partly from their IGF. E.g.
Public universities like UPSA.
– Self-funding entities, those that obtain
their solely funds from their activities.
E.g GBEs, Authorities like GHAPOHA,
VRA, GRA etc.

1/29/2015 copyright @Redeemer Krah 5

Composition (cont)
• Regarding powers and operation,
PSEs may be classified as;
– MDAs which are central administrative
structures for implementing
government policies and programmes.
– Boards, Commission and Authorities.
These are singular purpose statutory
institutions with considerable level of
administrative autonomy.
– Public tertiary educational and
research institutions such as UPSA, UG,
CSIR etc
– Local government which is the MMDAs
– Public Corporations/ SOEs/ GBEs.

1/29/2015 copyright @Redeemer Krah 6


Government Business
Enterprises (GBEs)
• Characteristics of GBEs according
to IPSAS include:
– They are granted the power to
contract in their own name.
– They are assigned financial and
operational authority to carry on
– They sell goods and services in the
normal course of business to other
entities at profit
– They do not reliant on continuous
government funding, and
– They are controlled by a PSE.

1/29/2015 copyright @Redeemer Krah 7

GBEs (cont)
• Funding of GBES include:
– Revenues from operation (sales of
goods and services)
– Borrowings
– Leasing
– Others

• Typical examples of GBEs include:

– National Investment Bank (NIB)
– State Insurance Company (SIC)
– Graphic Communication Group
– …. Etc.

1/29/2015 copyright @Redeemer Krah 8


Why Public sector?

• PSEs exist for the following
reasons, among others:
– To provide basic goods and services
at affordable prices to all citizens
regardless of their pocket
– To resolve inequality in service
delivery across the country
– To ensure that certain goods and
services are provided on consistent
basis. E.g. defense
– To assume control of certain key
areas of the economy.
– To substitute central planning in
place of individual choices

1/29/2015 copyright @Redeemer Krah 9

New Public management

• NPM refers to the practices where
proven business management
practices are adopted in the public
sector to improve economy,
efficiency, and effectiveness in public
service delivery.
• It refers to the attempt to resolve
public sector problems with business
• There is a call on governments across
the globe to improve efficiency and
accountability in public management.
• Therefore, the public sector is
reaching out for business practices in
various ways.

1/29/2015 copyright @Redeemer Krah 10


Characteristics of NPM
• NPM involves:
• strengthening steering functions at
the centre;
• devolving authority, providing
• ensuring performance, control,
• improving the management of
human resources;
• optimizing information technology;
• developing competition and choice;
• improving the quality of regulation;
• providing responsive service.

1/29/2015 copyright @Redeemer Krah 11

Forms of NPM (cont)

• NPM takes various forms and
models including:
– Public – private partnership
– Privatization or divestiture
– Contracting out/ outsourcing
– Output based budgeting
– Clientele service/ customer service
– Professionalization
– Increasing accountability and
transparency in governance
– Reforms/ change management
– Cost recovery/sharing ( New Public
funding Initiatives)

1/29/2015 copyright @Redeemer Krah 12


Outsourcing of public
service delivery
• Outsourcing Defined
– A.k.a contracting out.
– Outsourcing refers to the practice
of contracting out to a private
sector provider certain processes
within the government entities.
– Contracting out government
projects from infrastructure
constructions to consulting services
has been practiced with the
growing popularity of the New
Public Management (NPM) concept.

1/29/2015 copyright @Redeemer Krah 13

– Outsourcing government contracts
is one practice that is
recommended by practitioners and
advocates of NPM because this
model combines the use of
technology with technical expertise
– The financial and operational risk
rest with the government entity.
– The difference of outsourcing and
PPP is who bears the financial and
operational risk of the activity.

1/29/2015 copyright @Redeemer Krah 14


• Type of services outsourced in
PSEs include:
– Infrastructure
– Data management
– Recruitment process
– Revenue mobilization
– Application development and
– Customer support
– Security

1/29/2015 copyright @Redeemer Krah 15

• Benefits of outsourcing
– Improve efficiency in public service
– Strengthens the public institutions
politically through public approval
of the people as result of improve
service delivery
– It supports the idea of private
sector participation in the state
governance process
– It serves as catalyst for expanding
service provider capabilities and
intellectual capital for future use in

1/29/2015 copyright @Redeemer Krah 16


• Challenges of outsourcing
– It endangers privacy and security of
government systems
– It may be the means of “ shipping
work abroad”.
– Limited number of companies that
has the capacity to participate
– It may result in over dependence of
government entity on the private

1/29/2015 copyright @Redeemer Krah 17

• Factors to consider in outsourcing
– Issue of conflict of interest
– The capabilities and expertise of the
entity contractee
– The legal and government policy on
outsourcing of certain services
– Availability of potential service
– National and organisational security
– Relevance of the activity to the
organisation- “core” or “peripheral”
– Cost savings.

1/29/2015 copyright @Redeemer Krah 18


Public private partnership

• Broadly, PPP refers to arrangements,
typically medium to long term, between
the public and private sectors whereby
some of the services that fall under the
responsibilities of the public sector are
provided by the private sector, with
clear agreement on shared objectives
for delivery of public infrastructure and/
or public services.
• The traditional role of the Government
as the primary infrastructure and public
service provider is gradually being
supplemented with private sector
expertise and financing.

1/29/2015 copyright @Redeemer Krah 19

Types of PPP Arrangements

• There are several forms of PPP
and the most common ones are:
– Maintain and Operate (O&M)
– Build –Operate -Transfer (BOT)
– Build-Transfer –Operate (BTO)
– Build-Own – Operate
– Design-Build -Operate
– Concession

1/29/2015 copyright @Redeemer Krah 20


• Maintain and Operate

– Here the private sector is allowed to
manage and operate public sector
facility or service for a fee .
– Here the private sector finances
public infrastructure and allowed to
operate the facility for an agreed
period and thereafter transfer
ownership to the government.
– Is similar to BOT except that the
infrastructure is transferred upon
completion to government and the
private sector is allowed to operate
it thereafter

1/29/2015 copyright @Redeemer Krah 21

– Here an infrastructure that needed to
be provided by government is given to
the private sector to build, owned and
operate it for the public benefit
– Here, the public sector provides the
funding and the private sector is
engaged to design the project to meet
expected standards, build it and
operate it.
• Concession
– gives an operator the long term right
to use all utility assets conferred on
the operator, including responsibility
for all operation and investment. Asset
ownership remains with the

1/29/2015 copyright @Redeemer Krah 22


Objectives of PPP
• PPP policy of a government has the
following objectives;
– Encourage and promote increase
private sector participation in
– Increase availability of public
infrastructure at least cost to
– Leverage public assets with private
sector resources local and international
– It ensure risk sharing between the public
sector and private sector or risk transfer
to the private sector
– Improves the quality of public service
delivery by private expertise
– Sharing of mass expertise of the private
sector which is lacking in the public

1/29/2015 copyright @Redeemer Krah 23

• Divestiture a.k.a privatization
occurs when all or substantially all
the interests of a government in a
utility asset or a sector are
transferred to the private sector.
• In most cases, the government
generally retains some indirect
form of control or mechanism for
regulation over the privatized
utility, in the form of a license
granted to the entity to deliver the
service to the public.

1/29/2015 copyright @Redeemer Krah 24


Benefits of Divestiture
• The most cited benefits include:
– To increase economy and efficiency
in operating privatized entities
– To reduce the size of public sector
– To reduce public debt since
government most often borrow to
fund these entities
– To reduce government exposure to
commercial risk
– To provide opportunity to private
sector to grow through investment
in diversified entity
– Revenue from sales and taxes of

1/29/2015 copyright @Redeemer Krah 25

Demerits/risks of
• Some of the demerits and risks
– Lost of job in the restructuring
– High cost of goods and services
since prices are determined by
demand and supply
– Diversion of government plans and
policy regarding the privatized
– “Shipping of jobs” to foreign lands if
the entities are sold to foreigners.

1/29/2015 copyright @Redeemer Krah 26


Word of wisdom:
“Purport in life to help
others and where you can’t
help do not hurt them”

1/29/2015 copyright @Redeemer Krah 27